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Preface
Subscriber location information is a much-heralded asset of the telecoms operator. Operators have generally understood the importance of this asset but have typically struggled to monetize their position. Some operators have used location information to enable third party services whilst others have attempted to address the opportunity more holistically, with mixed success.
This report updates and expands on a previous STL Partners study: “Making Money from Location Insights” (2013). It outlines how to address the potential opportunity around Location Services. It draws on interviews conducted amongst key stakeholders within the emerging ecosystem, supplemented by STL Partners’ research and analysis, with the objective of determining how operators can release the value from their unique position in the location value chain.
This report focuses on what we have defined as Location Insight Services. The report argues that operators should first seek to offer Location Insight Services before evolving to cover Location Based Services. This strategic approach allows operators to better understand their data and to build location services for enterprise customers rather than starting with consumer-orientated location services that require additional capabilities. This approach provides the most upside with the least associated risk, offering the potential for incremental learning.
This report was commissioned and supported by Viavi Solutions (formerly JDSU). The research, analysis and the writing of the report itself were carried out independently by STL Partners. The views and conclusions contained herein are those of STL Partners.
Location Based Services vs. Location Insight Services
In the 2013 report, STL made a clear distinction between different types of location services.
- Location Based Services (LBS) are geared towards supporting business processes (typically marketing-oriented) that are dependent on the instant availability of real-time or near real-time data about an individually identifiable subscriber. These are provided on the reasonable assumption that knowing an individual’s location enables a company to deliver a service or make an offer that is more relevant, there and then. Typically these services require explicit consent and an interaction with the customer (e.g. push marketing) and therefore require compelling user interfaces and permissions.
- Additionally there is an opportunity to derive and deliver Location Insight Services (LIS) from connected consumers’ mobile location data. This opportunity does not necessarily require real-time data and where insights are aggregated and anonymized, can safeguard individuals’ privacy. The underlying premise is that identification of repetitive patterns in location activity over time not only enables a much deeper understanding of the consumer in terms of behavior and motivation, but also builds a clearer picture of the visitor profile of the location. Additionally LIS has the potential to provide data that is not available via other routes (e.g. understanding the footfall within a competitor’s store).
Figure 7: Mapping the Telco Opportunity Landscape
Source: STL Partners
The framework in Figure 7 has been developed by STL Partners specifically with the mobile operator’s perspective in mind. We have split out operator location opportunities along two dimensions:
- Real-time vs. Non-real-time data acquisition
- Individual vs. Aggregated data analysis and action
Choosing the Right Strategy
Where are we now?
Most operators understand the potential value of their location asset and have attempted to monetize their data. Some operators have used location to enable 3rd party services whilst others have attempted to address the opportunity more holistically. Both have achieved mixed success for a number of reasons.
Most operators who are attempting to monetize location data have been drawn towards Location Based Services, namely push-marketing and advertising. Whilst some operators have achieved moderate success here (e.g. O2 Priority Moments), most are acting as enablers for other services. They are therefore addressing a limited part of the value chain and subsequently are not realizing significant value from their data. We do not consider those that pursue this strategy to be Location Based Services Providers, rather they are simply enablers.
Similarly a number of operators are addressing Location Insights, albeit with different approaches. Some are partnering with analytics and insight companies (e.g. Telefonica and GfK), others are developing services mostly on their own (e.g. SingTel’s DataSpark), whilst others are simply launching pilots.
In order to maximize the value that operators can secure through Location Services, we believe that operators need to address the whole Location ‘Stack’, not simply enabling new services or providing raw data. STL believe that the best way to do this is to start with Location Insight Services.
Start with Location Insight Services
When considering how to develop and monetize their location assets we recommend that operator’s select to start with LIS. Whilst many operators are already engaged in LBS (e.g. enabling push-marketing) the majority are not actually providing the service but are simply sharing data and enabling a 3rd party service provider.
Starting with LIS has a number of strategic advantages:
- It’s a big opportunity in its own right
- Telcos (should) have a data capture/technology advantage for LIS over OTT players
- LIS provides an opportunity to build & learn incrementally, proving value
- Privacy risks are reduced (particularly with aggregated data)
- LIS does not require 100% coverage of the population, unlike a number of LBS use cases
- LIS can provide internal benefits and can bolster the Go-to-Market strategy for vertical specific offerings
These advantages are explored in more detail further in this report.
- Location, Location, Location
- The Importance of Information
- Location Based Services vs. Location Insight Services
- Choosing the Right Strategy
- Where are we now?
- Start with Location Insight Services
- Improve your LIS offering, transition towards LBS & position yourself as a Trusted Data Provider
- Location Insights – Marketplace Overview
- Where is the Opportunity for Location Insight Services?
- Which Sectors are most addressable?
- Sizing the Opportunity
- Why haven’t forecasts developed as quickly as expected?
- Location Insights potentially worth $5bn globally by 2020
- Benchmarks
- Where does the value come from – the Location Insights ‘Stack’
- Understanding the Technology Options
- The Technology Options for Location Data Acquisition
- Technology Advantages for Telcos
- The Right Degree of Location Precision
- Other Advantages of Starting with LIS
- Incremental Learning
- Addressing the Privacy Question
- Market Coverage
- LIS can provide internal benefits and can bolster the Go-to-Market strategy for vertical specific offerings
- Expanding Beyond Insights
- Addressing Location Based Services
- Becoming a Trusted Data Provider
- Practical Guidance to Launch Location Services
- Market Strategy
- Data Management
- An agile approach, partnering, orchestration and governance
- Conclusions
- Appendices
- Appendix 1: Location Acquisition Technologies in Detail
- Appendix 2: Opportunity Sizing Methodology
- Appendix 3: About STL Partners and Telco 2.0: Change the Game
- Figure 1: Location Insight vs. Location Based Services
- Figure 2: STL Partners’ Analysis of the value of Global Location Insight Services (by 2020)
- Figure 3: Analysis of location data acquisition technologies suitability for Location Insight Services
- Figure 4: The Strategy Beyond Location Insights
- Figure 5: The Explosion of Smartphones (2007-2014)
- Figure 6: ‘Non-Smart’ Data Insights Become More Important as More ‘Things’ are Connected
- Figure 7: Mapping the Telco Opportunity Landscape
- Figure 8: Four opportunity domains for operators
- Figure 9: Turkcell’s Smart Map Tool
- Figure 10: TomTom’s Fusion Engine to Analyze Real-Time Traffic Information
- Figure 11: Tado’s Proximity Based Thermostat
- Figure 12: Expanding Beyond LIS
- Figure 13: Location Insights – Market Taxonomy
- Figure 14: Telefónica Smart Steps Location Analytics Tool
- Figure 15: Motionlogic’s Location Analytics Tool
- Figure 16: The value of Global Location Insight Services by industry and sector (by 2020)
- Figure 17: The Location Insights ‘Stack’
- Figure 18: How well do different location data acquisition technologies support Location Insight Services needs?
- Figure 19: Real-Time vs. Near Real-Time Location Information
- Figure 20: Deveryware’s Dynamic Permissions Tool
- Figure 21: Become a Trusted Data Provider
- Figure 22: Analysis of App/OS based real-time location Technology
- Figure 23: Analysis of App/OS based data stored on device Technology
- Figure 24: Analysis of Emergency Services Location Technology
- Figure 25: Analysis of Granular (building level) network based Technology
- Figure 26: Analysis of Coarse (cell-level) network based Technology
- Figure 27: Analysis of Indoor Technologies
